Freeport-McMoRan 2005 Annual Report Download - page 77

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฀74฀|฀FREEPORT-McMoRan฀COPPER฀&฀GOLD฀INC.฀฀฀FINANCIAL฀&฀OPERATING฀INFORMATION฀74฀|฀FREEPORT-McMoRan฀COPPER฀&฀GOLD฀INC.฀฀฀FINANCIAL฀&฀OPERATING฀INFORMATION
Senior฀Notes.฀In฀February฀2004,฀FCX฀sold฀$350฀million฀of฀฀฀฀฀฀฀฀
6฀7
/8
%
฀Senior฀Notes฀due฀2014฀for฀net฀proceeds฀of฀$344.4฀million.฀
Interest฀on฀the฀notes฀is฀payable฀semiannually฀on฀February฀1฀
and฀August฀1฀of฀each฀year,฀beginning฀August฀1,฀2004.฀FCX฀may฀
redeem฀some฀or฀all฀of฀the฀notes฀at฀its฀option฀at฀a฀make-whole฀
redemption฀price฀prior฀to฀February฀1,฀2009,฀and฀afterwards฀at฀
stated฀redemption฀prices.฀The฀indenture฀governing฀the฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
notes฀contains฀certain฀restrictions,฀including฀restrictions฀on฀
incurring฀debt,฀creating฀liens,฀selling฀assets,฀entering฀into฀
certain฀transactions฀with฀affiliates,฀paying฀cash฀dividends฀on฀
common฀stock,฀repurchasing฀or฀redeeming฀common฀or฀
preferred฀equity,฀prepaying฀subordinated฀debt฀and฀making฀
investments.฀During฀2004,฀FCX฀purchased฀in฀open฀market฀
transactions฀$9.7฀million฀of฀its฀6฀7
/8
%
฀Senior฀Notes,฀which฀
resulted฀in฀a฀net฀gain฀of฀$0.8฀million฀recorded฀as฀a฀reduction฀
to฀losses฀on฀early฀extinguishment฀and฀conversion฀of฀debt.฀
฀ In฀February฀2003,฀FCX฀sold฀$575฀million฀of฀7%฀Convertible฀
Senior฀Notes฀due฀2011฀for฀net฀proceeds฀of฀$559.1฀million.฀
Interest฀on฀the฀notes฀is฀payable฀semiannually฀on฀March฀1฀and฀
September฀1฀of฀each฀year,฀beginning฀September฀1,฀2003.฀
The฀notes฀are฀convertible,฀at฀the฀option฀of฀the฀holder,฀at฀any฀
time฀on฀or฀prior฀to฀maturity฀into฀shares฀of฀FCX’s฀common฀
stock฀at฀a฀conversion฀price฀of฀$30.87฀per฀share,฀which฀is฀equal฀
to฀a฀conversion฀rate฀of฀approximately฀32.39฀shares฀of฀
common฀stock฀per฀$1,000฀principal฀amount฀of฀notes.฀In฀the฀
second฀half฀of฀2005,฀FCX฀privately฀negotiated฀transactions฀฀฀฀฀฀฀
to฀induce฀conversion฀of฀$251.3฀million฀of฀its฀7%฀Convertible฀
Senior฀Notes฀into฀8.1฀million฀shares฀of฀FCX฀common฀stock.฀
FCX฀recorded฀charges฀of฀$25.2฀million,฀$23.3฀million฀to฀net฀
income,฀net฀of฀related฀reduction฀of฀interest฀expense,฀or฀฀฀
$0.11฀per฀diluted฀share,฀in฀2005฀as฀a฀result฀of฀these฀transactions.฀
In฀January฀2006,฀FCX฀privately฀negotiated฀transactions฀to฀
induce฀conversion฀of฀$11.0฀million฀of฀its฀7%฀Convertible฀Senior฀
Notes฀into฀0.4฀million฀shares฀of฀FCX฀common฀stock.฀FCX฀฀฀฀
will฀record฀charges฀of฀$0.8฀million,฀$0.5฀million฀to฀net฀income,฀
net฀of฀related฀reduction฀of฀interest฀expense,฀in฀the฀first฀
quarter฀of฀2006฀as฀a฀result฀of฀these฀transactions.฀The฀notes฀
are฀unsecured.
฀ In฀January฀2003,฀FCX฀sold฀$500฀million฀of฀10฀1
/8
%
฀Senior฀
Notes฀due฀2010฀for฀net฀proceeds฀of฀$487.3฀million.฀Interest฀฀
on฀the฀notes฀is฀payable฀semiannually฀on฀February฀1฀and฀
August฀1฀of฀each฀year,฀beginning฀August฀1,฀2003.฀FCX฀may฀
redeem฀some฀or฀all฀of฀the฀notes฀at฀its฀option฀at฀a฀make-whole฀
redemption฀price฀prior฀to฀February฀1,฀2007,฀and฀afterwards฀฀฀฀฀
at฀stated฀redemption฀prices.฀In฀the฀second฀half฀of฀2005,฀FCX฀
purchased฀in฀open฀market฀transactions฀$216.1฀million฀of฀its฀฀
10฀1
/8
%
฀Senior฀Notes.฀FCX฀recorded฀charges฀of฀$26.9฀million,฀
$16.9฀million฀to฀net฀income฀or฀$0.08฀per฀diluted฀share,฀in฀
2005฀as฀a฀result฀of฀these฀transactions.฀The฀indenture฀governing฀
the฀notes฀contains฀restrictions฀and฀limitations฀on฀incurring฀
debt,฀creating฀liens,฀entering฀into฀sale฀leaseback฀transactions,฀
Notes to Consolidated Financial Statements
Note฀5.฀LONG-TERM฀DEBT
December฀31,฀ ฀ 2005฀ 2004
(In฀Thousands)
Senior฀Notes:฀฀
฀ 6฀7
/8%฀Senior฀Notes฀due฀2014฀฀ ฀ ฀ ฀ ฀ ฀ ฀ $฀ 340,295฀ $฀ 340,295
฀ 7%฀Convertible฀Senior฀Notes฀due฀2011฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ 323,667฀ ฀ 575,000
฀ 10฀1
/8%฀Senior฀Notes฀due฀2010฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ 283,895฀ ฀ 500,000
฀ 7.50%฀Senior฀Notes฀due฀2006฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ 55,404฀ ฀ 66,516
฀ 7.20%฀Senior฀Notes฀due฀2026฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ 175฀ ฀ 4,525
Redeemable฀Preferred฀Stock:
฀ Gold-Denominated฀Preferred฀Stock,฀Series฀II฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ 167,379฀ ฀ 167,379
฀ Silver-Denominated฀Preferred฀Stock฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ 12,501฀ ฀ 25,002
Notes฀Payable:
฀ Equipment฀capital฀leases,฀average฀rate฀6.0%฀in฀2005฀and฀4.4%฀in฀2004฀ ฀ ฀ ฀ ฀ ฀ 67,217฀ ฀ 72,545
฀ Atlantic฀Copper฀facility,฀average฀rate฀5.5%฀in฀2005฀and฀3.6%฀in฀2004฀ ฀ ฀ ฀ ฀ ฀ 3฀ ฀ 4,381
฀ Other฀notes฀payable฀and฀short-term฀borrowings฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ 5,412฀ ฀ 9,254
฀ Puncakjaya฀Power฀bank฀debt,฀average฀rate฀3.2%฀in฀2004฀ ฀ ฀ ฀ ฀ ฀ ฀ —฀ ฀ 187,009
฀ FCX฀and฀PT฀Freeport฀Indonesia฀credit฀facility฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ —฀ ฀ —
Total฀debt฀฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀1,255,948฀ ฀1,951,906
Less฀current฀portion฀of฀long-term฀debt฀and฀short-term฀borrowings฀ ฀ ฀ ฀ ฀ ฀ ฀ (253,350)฀ ฀ (78,214)
Long-term฀debt฀ ฀ ฀ ฀ ฀ ฀ ฀ $฀1,002,598฀ $฀1,873,692